Thursday, May 15, 2008

Buy a life annuity later

Dear Mr. Tan,
I am 48 yr of age. I am comtemplating to buy an annuity now, the payout to start from, maybe 55 or 60 yrs onwards. I found the payout be be exceedingly low. For a $100K annuity, the guarantee payout is about $400 per month plus an non-guaranteed amount for the rest of the life. A little calculation shows the breakeven for the investment is about 25 to 30yrs, hardly seemed worthwhile, not factoring inflation yet. May I have your advise on the investment?

REPLY
I suggest that you invest in a low cost investment fund for the next 10 to 20 years and find a right time, when the market is high, to convert into a life annuity when you are older, say from age 60 to 70 years.
Read this FAQ:http://www.tankinlian.com/faq/savings.html
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1 comment:

tatos@irc.rizon.net said...

I do support Mr Tan's opinion. At this moment Annuity payout is exceeding low, and too from the looks of it, low-medium risk investments actually payout better.

However if you know of someone who is older (at this point in time) and can't risk investing, Annuities is something to consider.

May 15, 2008 3:22 PM

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